Current smartwatches suck IMO purely because they still require your existing smartphone to work and have terrible battery life. And the majority so far are fugly. Like 1980's $10 Casio fugly.
I see that as a good thing, I don't want another device with Internet access and that has direct access to all my accounts. I'd much rather everything was pushed/pulled out from my phone.
I agree about battery life and looks.
I like what Apple has done with using the crown as an input device and some intelligent use of touch & haptic feedback (not saying it's perfect, but I like what they've done so far). I believe the way we interact with devices should be less about viewing/touching a screen and instead be a more physical experience like the way we interact with other, non-tech, things in our world. (also not saying a screen with touch input is always bad, I just think it's over used).
So I very much for a smart watch that's more watch than phone. I'm ok with it showing important notifications, in context and when they are relevant (e.g. Cortana or Google Now), and I'd like certain controls (also contextual, like playing music, start/stop the current GPS tracking, etc., even Xbox One integration as mentioned before), the navigation via vibration in the Apple watch seems usable too, and having a microphone to access Cortana would be useful in some situations (voice control still needs some work but it is a natural way for us to communicate). I don't want all my notifications showing up (e.g. Facebook event invites and every email or Tweet that comes in) and I don't need to reply to text messages, etc.
I see the benefit of a smart watch, over just using your phone, as being the fact that it's always strapped to your wrist and doesn't necessarily need to be locked (or even if you want to then this could be done through some biometrics like heart beat so it's basically always unlocked on your wrist). It also should have a long battery life (like the Pebble). Some benefits of this are being able to control music easily while on the move and getting important notifications that you might miss with your phone in you bag (I stress important, as per my comments above).
Separate to that (for me) is a fitness band of some kind, that fills a specific need and I'm ok with it not looking and working like a traditional watch.